Gold Hits 3-Week High On Short Covering, Safe-Haven Buying

(Kitco News) - Gold prices ended the U.S. day session higher and notched a three-week high Thursday. More short covering and bargain hunting were featured, as has been the case the past few sessions. Now, some safe-haven demand is also surfacing due to unrest in Iraq. August Comex gold was last up $11.90 at $1,273.10 an ounce. Spot gold was last quoted up $12.40 at $1,273.50. July Comex silver last traded up $0.338 at $19.51 an ounce.

Iraq is back in the news headlines again, as civil war has broken out in that country amid escalating violence. Iraq’s ruling government is calling on the U.S. for military aid, although such is not likely. Crude oil prices were sharply higher Thursday, mostly on the Iraq news. Gold also saw some safe-haven buying support on the news. The bigger worry is that the violence in Iraq could spread to other Arab countries.

The big price declines in platinum and palladium prices Thursday could have seen some money coming out of those markets and into gold and silver. And some downbeat U.S. economic data that saw a rise in weekly jobless claims and lower-than-expected retail sales were also friendly for the gold market. The weaker U.S. dollar index Thursday also fell into the camp of gold market bulls.

In other overnight news, industrial production in the European Union rose 0.8% in April from March and was up 1.4% year-on-year. The increase was a bit larger than forecast.

The London P.M. gold fix was $1,265.75 versus the previous A.M. fixing of $1,261.75.

Technically, August gold futures prices closed nearer the session high Thursday. Gold market bears still have the overall near-term technical advantage. However, the bulls are making a modest move. Prices are still in a three-month-old downtrend on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,285.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at this week’s low of $1,250.10. First resistance is seen at Thursday’s high of $1,274.60 and then at $1,278.00. First support is seen at $1,268.50 and then at Thursday’s low of $1,260.00. Wyckoff’s Market Rating: 3.5

July silver futures prices closed nearer the session high and did hit a three-week high Thursday. More short covering was featured. The key “outside markets” were also in a bullish posture for silver today as the U.S. dollar index was lower and crude oil prices were sharply higher. The silver bears still have the overall near-term technical advantage. However, the silver bulls are also making a move. Prices are still in a 3.5-month-old downtrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the May high of $20.005 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at this week’s low of $18.97. First resistance is seen at Thursday’s high of $19.565 and then at $19.825. Next support is seen at $19.33 and then at Thursday’s low of $19.15. Wyckoff's Market Rating: 3.0.

July N.Y. copper closed down 250 points at 301.05 cents Thursday. Prices closed nearer the session low and hit a six-week low. Copper bears have the overall near-term technical advantage and gained fresh downside momentum today. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at 310.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at 300.00 cents. First resistance is seen at Thursday’s high of 304.75 cents and this week’s high of 307.00 cents. First support is seen at Thursday’s low of 301.15 cents and then at 300.00 cents. Wyckoff's Market Rating: 3.5.